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Coling The Shots: Will The Psei Retest 2020 Lows?: Stocks in Focus

- The Philippine stock market has fallen sharply in recent weeks as daily COVID-19 cases surpassed 8,000, making it the worst performing market in Asia for 2021. - While the market may remain depressed in the near term, the analyst does not believe the PSEi will retest its 2020 low of 4,600 or fall below 5,000, given low chances of renewed lockdowns, vaccine availability, global recovery, and stock valuations. - The analyst is adding CNPF, DNL and ALI to their stock picks, seeing resilience in CNPF and DNL and attractive valuations, while expecting ALI's office and residential businesses to remain strong despite pandemic impacts.

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0% found this document useful (0 votes)
45 views5 pages

Coling The Shots: Will The Psei Retest 2020 Lows?: Stocks in Focus

- The Philippine stock market has fallen sharply in recent weeks as daily COVID-19 cases surpassed 8,000, making it the worst performing market in Asia for 2021. - While the market may remain depressed in the near term, the analyst does not believe the PSEi will retest its 2020 low of 4,600 or fall below 5,000, given low chances of renewed lockdowns, vaccine availability, global recovery, and stock valuations. - The analyst is adding CNPF, DNL and ALI to their stock picks, seeing resilience in CNPF and DNL and attractive valuations, while expecting ALI's office and residential businesses to remain strong despite pandemic impacts.

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Jajahina
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© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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Stocks in Focus: FRI 26 MAR 2021

COLing the Shots: Will the PSEi retest


2020 lows?

The stock market fell sharply the past few weeks as the number of daily new covid-19 cases (AS OF MAR 25, 2020)
jumped to a record high of more than 8,000. Coupled with the steep rise of inflation, the INDICES
Philippine stock market has decoupled from the rest of Asia and is now the region’s worst Close Points % YTD%
performing market in 2021. PSEi 6,581.00 83.99 1.29 -7.83
All Shares 3,976.83 41.90 1.06 -6.92
Although the local stock market could stay depressed in the near term as the number of Financials 1,412.19 -3.09 -0.22 -2.45
Holding Firms 6,663.74 145.76 2.24 -9.39
infections stay elevated, I do not think we will see the PSEi retesting the 2020 low of 4,600
Industrial 8,571.05 78.09 0.92 -8.75
or going below 5,000 given the small likelihood that the government will reimpose ECQ, Mining & Oil 8,456.72 225.99 2.75 -11.24
the availability of vaccines, the ongoing global economic recovery and the cheap valuation Property 3,273.53 40.13 1.24 -10.67
of stocks. Services 1,445.21 5.03 0.35 -4.55

Dow Jones -3 -0.01 5.93


Aside from the stocks that are already part of our COLing the Shots stock picks, I’m adding 32,420.06
S&P 500 3,889.14 -21.38 -0.55 3.54
CNPF, DNL and ALI. CNPF and DNL are showing resilience to the crisis and are trading at Nasdaq 12,961.89 -265.81 -2.01 0.57
attractive valuations. Meanwhile, ALI underperformed the market so far this year. Although
the company’s mall business will be negatively affected by the recent rise in infections,
its office leasing business is expected to remain resilient while its residential business INDEX GAINERS

continues to recover. Valuations are also attractive. Ticker Company Price %


JGS JG Summit Hldgs Inc 61.80 5.37
DMC DMCI Hldgs Inc 5.32 4.93

Top Stories: URC Universal Robina Corp 132.00 3.94


AC Ayala Corporation 759.50 3.90
AGI Alliance Global Inc 10.58 2.32
Economy: Monetary Board keeps policy rate steady
INDEX LOSERS
Ticker Company Price %
COVID-19 Update: MER Manila Electric Co 274.60 -1.93
BPI Bank of the Phil Islands 84.05 -0.88
Total Cases Total Deaths Total Recoveries RRHI Robinsons Retail Hldgs 57.45 -0.78
GLO Globe Telecom Inc 1900.00 -0.52
Philippines 693,048 (+8,773) 13,095 (+56) 580,062 (+574)
MPI Metro Pacific Inv Corp 3.73 -0.27

USA 30,768,873 (+66,893) 559,604 (+1,369) 23,192,364 (+64,683)

Worldwide 126,032,912 (+702,029) 2,766,297 (+10,959) 101,697,176 (+521,811) TOP 5 MOST ACTIVE STOCKS
Ticker Company Turnover
ALI Ayala Land Inc 680,739,500
BDO BDO Unibank Inc 291,508,700
PGOLD Puregold Price Club Inc 224,082,800
SM SMInvestments Corp 197,537,800
URC Universal Robina Corp 186,445,900

Disclaimer: All content provided in COL Reports are meant to be read in the COL Financial website. Accuracy and completeness of content cannot be guaranteed if reports are viewed outside of the
COL Financial website as these may be subject to tampering or unauthorized alterations.
DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 26 MAR 2021

Market Summary:

The local equities market rallied for the third straight day on Thursday as sentiment
improved amidst the arrival of more vaccines in the country.

The PSEi gained 83.99 points or 1.29% to close at 6,581.00. The top movers were JGS
(+5.37%), DMC (+4.93%), URC (+3.94%), AC (+3.90%), and AGI (+2.32%). On the other
hand, these were partially offset by decliners such as MER (-1.93%), BPI (-0.88%), RRHI
(-0.78%), GLO (-0.52%), and MPI (-0.27%).

Value turnover declined to Php6.1Bil from Php21.3Bil in the previous session. Meanwhile,
foreigners turned net sellers, disposing Php784Mil worth of shares.

COL Financial Group, Inc. 2


DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 26 MAR 2021

Stock in Focus:

April Tan, CFA COLing the Shots: Will the PSEi retest 2020 lows?
Chief Equity Strategist
The stock market fell sharply the past few weeks as the number of daily new covid-19
cases jumped to a record high of more than 8,000. Coupled with the steep rise of inflation,
the Philippine stock market has decoupled from the rest of Asia and is now the region’s
worst performing market in 2021.

Although the local stock market could stay depressed in the near term as the number
of infections stay elevated, I do not think we will see the PSEi retesting the 2020 low of
4,600 or going below 5,000 given the small likelihood that the government will reimpose
ECQ, the availability of vaccines, the ongoing global economic recovery and the cheap
valuation of stocks.

Admittedly, being cheap is not a good enough reason for stock prices to move higher.
However, every crisis creates opportunities and stocks would not trade at such a cheap
valuation if there were no problems. Consequently, the market’s prevailing weakness is
an opportunity for patient investors to make money over the long-term. Just be sure to
manage you risk by buying slowly and using long-term funds.

Theoretically speaking, defensive stocks should be better under the present scenario. The
fact that their earnings are expected to remain stable even with the recent increase in
cases, and that most provide attractive dividend yields and are trading at cheap valuations
make them appear as the obvious winners.

However, we should not ignore cyclical stocks either because many of them are trading at
extremely cheap valuations. Although the latest increase in infections and tightening of
restrictions will hurt their profitability, most of these companies’ profits will still be higher
compared to last year. Moreover, most cyclical companies already took necessary steps
that will allow them to survive a prolonged economic slowdown and remain profitable
even at lower operating capacity. Finally, once the economic recovery gains traction,
these cyclical stocks should outperform defensive stocks since they stand to benefit
more from an economic recovery.

Aside from the stocks that are already part of our COLing the Shots stock picks, I’m
adding CNPF, DNL and ALI. CNPF and DNL are showing resilience to the crisis and are
trading at attractive valuations. Meanwhile, ALI underperformed the market so far this
year. Although the company’s mall business will be negatively affected by the recent rise
in infections, its office leasing business is expected to remain resilient while its residential
business continues to recover. Valuations are also attractive.

COL Financial Group, Inc. 3


DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 26 MAR 2021

Top Story:

John Martin Luciano, CFA Economy: Monetary Board keeps policy rate steady
Senior Research Analyst

The Monetary Board decided to maintain the interest rate on the BSP’s overnight reverse
repurchase facility at 2.0%. Likewise, the interest rates on the overnight deposit and
lending facilities were kept at 1.5% and 2.5%, respectively. The latest inflation forecasts
have shifted higher over the policy horizon. Inflation may breach the upper end of
the target range of 2-4% in 2021, reflecting the impact of supply-side constraints on
domestic prices of key food commodities such as meat as well as the continuing uptick in
international oil prices. Nevertheless, inflation is still seen to return within the target band
in 2022 as supply-side influences subside. Note that the central bank raised its inflation
forecast to 4.2% from the previous target of 4.0% for 2021 and to 2.8% from 2.7% for
2022. Meanwhile, the balance of risks to the inflation outlook remains broadly balanced
in 2021 while leaning toward the downside in 2022. Tighter domestic supply of meat
products and improved global economic activity could lend further upside pressures
on inflation. However, the ongoing pandemic also continues to pose downside risks to
the inflation outlook, as the recent surge in virus infections and challenges over mass
vaccination programs continue to temper prospects for domestic demand.

In light of these factors, the Monetary Board believes that the monetary policy settings
remain appropriate to support the government’s broader efforts to facilitate the recovery
of the economy. At the same time, it emphasizes that the timely implementation of
non-monetary interventions is crucial in mitigating the impact of supply-side pressures
on inflation and thereby preventing them from spilling over as second-round effects.
Looking ahead, the BSP will remain watchful for any signs of inflation becoming broader
based. The BSP is prepared to take immediate measures to ensure that the monetary
policy stance continues to support the BSP’s price and financial stability objectives. (Source:
Philstar, BSP)

COL Financial Group, Inc. 4


DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 26 MAR 2021

I M P O R TA N T R AT ING DEFINITIONS
BUY
Stocks that have a BUY rating have attractive fundamentals and valuations based on our analysis. We expect the share price to outperform the market in the
next six to 12 months.

HOLD
Stocks that have a HOLD rating have either 1) attractive fundamentals but expensive valuations 2) attractive valuations but near-term earnings outlook might
be poor or vulnerable to numerous risks. Given the said factors, the share price of the stock may perform merely in line or underperform in the market in the
next six to twelve months.

SELL
We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to12 months.

I M P O R TA N T DISC L AIM ER
Securities recommended, offered or sold by COL Financial Group, Inc. are subject to investment risks, including the possible loss of the principal amount invested.
Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and said information may
be incomplete or condensed. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of the date of the report and are
subject to change without prior notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of
a security. COL Financial and/or its employees not involved in the preparation of this report may have investments in securities of derivatives of the companies
mentioned in this report and may trade them in ways different from those discussed in this report.

CO L R E S EAR C H T EAM

APRIL LYNN TAN, CFA


VP & HEAD OF RESEARCH
april.tan@colfinancial.com

CHARLES WILLIAM ANG, CFA GEORGE CHING RICHARD LAÑEDA, CFA


DEPUTY HEAD OF RESEARCH SENIOR RESEARCH MANAGER SENIOR RESEARCH MANAGER
charles.ang@colfinancial.com george.ching@colfinancial.com richard.laneda@colfinancial.com

JOHN MARTIN LUCIANO, CFA FRANCES ROLFA NICOLAS JUSTIN RICHMOND CHENG, CFA
SENIOR RESEARCH ANALYST RESEARCH ANALYST RESEARCH ANALYST
john.luciano@colfinancial.com rolfa.nicolas@colfinancial.com justin.cheng@colfinancial.com

ADRIAN ALEXANDER YU KERWIN MALCOLM CHAN


RESEARCH ANALYST RESEARCH ANALYST
adrian.yu@colfinancial.com kerwin.chan@colfinancial.com

C OL F INANC IAL G R O UP, IN C.


2402-D EAST TOWER, PHILIPPINE STOCK EXCHANGE CENTRE,
EXCHANGE ROAD, ORTIGAS CENTER, PASIG CITY
PHILIPPINES 1605
TEL NO. +632 636-5411
FAX NO. +632 635-4632
WEBSITE: www.colfinancial.com

COL Financial Group, Inc. 6

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